More drug-pricing trouble: generic manufacturers are accused of price collusion

Connecticut leads 20 states suing an alleged ring led by Heritage Pharma


Unlike the many other controversies and litigation over drug prices these days, this one seems like a plain-vanilla allegation of price fixing and collusion, violating the Sherman Antitrust Act. Following a two-year investigation into the dramatic rise of some generic drug prices, 20 states attorneys general have banded together in a suit filed in Connecticut’s federal District Court, against six generics manufacturers over the pricing and distribution of two drugs: delayed-release doxycycline (aka Doxy DR), an antibiotic, and glyburide, a diabetes treatment. ““While the principal architect of the conspiracies addressed in this lawsuit was Heritage Pharmaceuticals, we have evidence of widespread participation in illegal conspiracies across the generic drug industry,” said CT AG, George Jepsen. In press reports, Jepsen notes that this is the initial stage of an ongoing investigation, and that “many more companies” are involved.

The five other companies are Aurobindo Pharma USA, Citron Pharma, Mayne Pharma, Mylan Pharmaceuticals and Teva Pharmaceuticals USA. Heritage is also in the gunsights of the US Dept. of Justice; its former CEO, Jeffrey Glazer, and former president, Jason Malek, were charged with criminal complaints on Dec. 14 for much of the same alleged misconduct.

The Generic Pharmaceutical Assn. hasn’t yet commented on the allegations publicly; ironically, the same day that the DoJ indictment was filed, GPhA issued a news release on its favorite topic, accelerating branded-to-generic conversion, citing a recent AARP study and concluding, “This study shows that seniors and our entire healthcare system would greatly benefit from more generic competition. GPhA urges the new Administration and policymakers to take immediate action towards this goal.”

The Connecticut indictment, viewable in redacted form here, cites a long list of communications between various alleged co-conspirators, and highlghts the meetings that occur at numerous national industry organizations, including those of GPhA, the National Assn. of Chain Drug Stores, the Healthcare Distribution Alliance, and the Efficient Collaborative Retail Marketing organization. Also “Girls Night Out” meetings of female pharma execs (for some reason, this activity in Minnesota seems to have been especially energetic). These meetings were held during 2013-2015.

If this state action leads to convictions or settlements, and follows more or less the pattern set by earlier multi-state actions over industry-wide artificial price-setting for publicly funded medical insurance programs, expect multi-million-dollar settlements with the states, and then a second wave of the 30 other states piling in.